How COVID-19 hit the beauty market

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Among COVID-19’s lengthening list of casualties is apparently the “lipstick index”—that handy heuristic cooked up by cosmetic giant Leonard Lauder to gauge consumer demand in tough times. The premise: No matter how tight belts got, women would still shell out for the small luxury of a name-brand lipstick.

But with face masks hiding all but our bloodshot eyes and worried foreheads, who needs lipstick these days? Perhaps in an age of pandemic, it’s hand moisturizer, acne cleanser, and soothing botanical masks we should be stockpiling.

Come to think of it, that’s precisely what we’re doing. “With physical distancing and mask wearing the norm,” says Paula Simpson, principal, Nutribloom Consulting (New York and Toronto), “the ‘lipstick effect’ just doesn’t hold this time.”

Rather, as consumers hunker down at home with wellness top of mind, products that position beauty as “treatment” are relevant and are seeing sales surge as a result. After all, even amidst global contagion—in fact, especially amidst global contagion—looking good helps us feel even better.

Beauty Disrupter

As COVID-19 laid waste to activities and occasions we’d taken for granted, it turned the market for beauty products upside down.

“Beauty retail sales were well positioned for growth before COVID-19,” observes Alexis DeSalva, senior analyst, retail and e-commerce, Mintel (Chicago). “However, the pandemic caused immediate disruption to the beauty retail landscape as well as consumers’ lives and, consequently, their beauty routines.”

According to Mintel’s October 2020 report¹ on beauty retailing in the COVID era, the market research firm expects category sales overall to fall 7.7% for the year. Yet the report notes that not all segments are suffering equally; in fact, some seem poised to benefit from consumers’ at-home habits and concerns.

Cosmetics Crash

To wit, the report notes that beauty’s biggest category, skincare, should reap gains as consumers alter their beauty needs to prioritize wellness and self-care—of which skincare is a component.

Meantime, second-place cosmetics face what the report describes as “steep declines as consumers have fewer reasons for and interest in wearing makeup.” In fact, Mintel’s earlier July report on color cosmetics² found nearly 50% of women spending less on makeup thanks to COVID-19.

But even here, some cosmetics are finding a way to thrive in the new normal. According to the May 2020 article³, “How Covid-19 Is Changing the World of Beauty,” McKinsey researchers found that while product sales of prestige beauty and makeup declined a respective 55% and 75% relative to 2019’s numbers, eye cosmetics—which, of course, are visible above the mask line—saw sales rise 150%, while nail products were up fully 218%.

Self-Care Soars

Then there’s hair color, sales of which the report says grew 172% versus the previous year, as well as bath products—up 65%—underscoring consumers’ doubling down on self-care while stuck at home in their jammies.

Aromatherapy and “detox” products have also enjoyed a COVID bounce, Simpson adds, which leads her to declare “a shift in consumer demand toward do-it-yourself beauty treatments. Others are evening predicting that we may see a ‘nail-polish effect’ rather than the ‘lipstick effect’ we’ve seen before.”

Taking Charge

So with “DIY” beauty on the rise, is the pandemic empowering consumers to take charge of their personal care as it’s done with their proactive approach toward exercising, eating, and supplementing for health and wellness? “Yes, I believe so,” Simpson says.

We need look no farther than Google search trends to see that empowerment in action, as the makeup-focused terms that dominated only a year ago—think “blush”—have given way to search terms pointing consumers toward tips on taking care of their appearance at home. Among 2020’s top trending beauty how-to searches⁴ were “how to cut men’s hair at home,” “how to color your hair at home”—even “how to dermaplane.”

Look Good, Feel Better

To the extent that this DIY ethos reflects a zeal for consumers to get back to basics and reexamine their values, it’s of a piece with the continued—even strengthened—interest they’ve shown in “clean,” pared-down beauty formulations.

Mintel’s October 2020 beauty report notes that “what’s in a beauty product” ranks as important to nearly 40% of shoppers, which should cue brands and retailers to shift their products’ narratives away from aesthetic benefits and toward overall health and wellbeing. Offering transparent messaging about ingredient sourcing and sustainability is also “critical to helping consumers find products and relevant information during their shopping journey,” the report states.

Simpson agrees. “I think the nontoxic, gentle, and clean beauty trends are here to stay,” she says. “The pandemic is really accelerating the demand that brands be transparent, authentic, and respectful of the health and safety not only of their consumers but also of the planet.”

Digitally Enhanced

And it’s accelerated their transition to e-commerce platforms, whether they like it or not. According to McKinsey, while in-store shopping accounted for 85% of beauty purchases in most major beauty markets before the pandemic, orders to close retail outlets shuttered about 30% of the global beauty industry, with some shops likely never to reopen.

Savvy beauty brands were quick to react by shifting their sales focus to digital platforms, both to recover lost revenue and hang onto consumer loyalty. And as it turns out, there’s a lot for beauty brands to gain from the e-commerce model. For instance, they can use online purchase data and AI to drive product development toward greater personalization and targeting—both beauty trends to watch. “And in this sense,” Simpson says, “the consumer is in the driver’s seat of brand innovation, and is expecting brands to deliver faster than ever.”

But how will consumers know that brands are delivering if they can’t—or are reluctant to—return to stores for samples, demos, and tutorials? Moving forward, Mintel’s beauty report suggests that retailers “focus on making the online experience entertaining and engaging, leveraging video platforms and virtual tools, which can aid discovery and encourage unplanned purchases even during a period of limited spending.”

Back to Beauty

So once society reopens and we’re having real-world fun again, the question remains as to whether COVID caution will linger—or red lipstick will resume its reign.

“That’s an interesting question,” Simpson opines. “I think there’s now heightened awareness of how we take care of ourselves—our mental and physical health, including our outer appearance. And I’m sure a swing back to glamour and lipstick will occur post-pandemic.” But on things going entirely back to normal, she reserves judgement.

Either way, Simpson concludes, “Self-care is here to stay, and with that, brands should be ready to put their best foot forward by being transparent, engaging, and flexible enough to move with consumer demands and trends.”

References

1. Mintel report. “Beauty Retailing: Incl Impact of COVID-19 – US.” October 2020. Accessed here.
2. Mintel report. “US Color Cosmetics: Incl Impact of COVID-19 Market Report.” July 2020. Accessed here.
3. McKinsey & Company website. “How COVID-19 Is Changing the World of Beauty.” Published May 5, 2020. Accessed here.
4. “2020 Google Beauty Searches.” Global Cosmetic Industry. Published online December 9, 2020. Accessed here.